The SBA determines small business size standards for each NAICS code based on either annual revenue or number of employees. Contracting officers must conduct market research to determine if a set-aside is appropriate. If there is a reasonable expectation of receiving two or more competitive offers from small businesses at fair market prices, the acquisition should be set aside. This is known as the Rule of Two.
An agency plans to purchase $200,000 in office furniture (NAICS 337214, SBA size standard: 1,000 employees). Market research identifies four small businesses that can provide the furniture. The contracting officer sets the acquisition aside for small businesses, excluding large manufacturers.
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